Question 1

There is no unique break-even point when there are multiple cost drivers.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following question(s)using the information below.
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet:
   Southwestern College has budgeted $1,800 for administrative and marketing expenses.It plans to hire a band which will cost another $800.Tickets are expected to be $30 per person.Local business supporters will donate any other items required for the event.
-Mrs.Tisdale is going to sell Christmas tree lights for $40 a box.The lights cost Mrs.Tisdale $10 a box and any unsold lights can be returned for a full refund.She is planning to rent a booth at the upcoming Happy Holidays Convention,which offers three options:
1.paying a fixed fee of $3,000,or
2.paying a $1,000 fee plus 10% of revenues made at the convention,or
3.paying 25% of revenues made at the convention.
Which of the following statements is FALSE?

Accepted Answer

A) Her decision will determine the risk she faces. 
B) Contribution margin will vary depending upon the option chosen. 
C) One of the options will allow Mrs.Tisdale to break even,even if she doesn't sell any lights. 
D) Operating income will always be the greatest for Option 3. 
E) Option 3 has the lowest operating leverage. 
A) Her decision will determine the risk she faces. 
B) Contribution margin will vary depending upon the option chosen. 
C) One of the options will allow Mrs.Tisdale to break even,even if she doesn't sell any lights. 
D) Operating income will always be the greatest for Option 3. 
E) Option 3 has the lowest operating leverage.

Question 3

What would target operating income be when fixed costs equal $6,000,unit contribution margin equals $40.00,and the number of units equals 400?

Accepted Answer

A) $6,000 
B) $10,000 
C) $16,000 
D) $20,000 
E) $60,000 
A) $6,000 
B) $10,000 
C) $16,000 
D) $20,000 
E) $60,000

Question 4

A revenue driver is defined as

Accepted Answer

A) any factor that affects costs and revenues. 
B) any factor which could cause a change in revenue. 
C) any factor which could cause a change in the costs of a related revenue object. 
D) any factor which does not affect costs associated with a revenue. 
E) any factor that changes when revenue changes. 
A) any factor that affects costs and revenues. 
B) any factor which could cause a change in revenue. 
C) any factor which could cause a change in the costs of a related revenue object. 
D) any factor which does not affect costs associated with a revenue. 
E) any factor that changes when revenue changes.

Question 5

Popcorn Inc.currently sells plain popcorn at the ballpark.During a typical month the stand reports a profit of $18,000 with sales of $100,000 and fixed costs of $42,000 and variable costs of $0.64 per box.
Next year the company plans to start selling candy-coated popcorn for $3 a box.The candy-coated popcorn will have a variable cost of $0.72.The new equipment and personnel to handle the popcorn will increase monthly fixed costs by $17,616.Two boxes of candy-coated popcorn are expected to sell for every box of plain popcorn.
Required:
a.Determine the monthly break-even sales in units before adding the candy-coated popcorn product.
b.Determine the monthly break-even sales in units of each product during the first year of candy-coated popcorn sales assuming a constant sales mix.

Accepted Answer

a.
 @#IMG-DLM& 
N = Break-even units
$1.60 - $0.64

Question 6

Cost-volume-profit analysis is useful for

Accepted Answer

A) helping managers to answer "what-if" questions. 
B) implementing a differentiation strategy. 
C) eliminating uncertainty about external factors,such as interest rates. 
D) for long-range planning. 
E) assigning costs to products. 
A) helping managers to answer "what-if" questions. 
B) implementing a differentiation strategy. 
C) eliminating uncertainty about external factors,such as interest rates. 
D) for long-range planning. 
E) assigning costs to products.

Question 7

Operating income is equal to net income plus income taxes.

Accepted Answer

A) True 
 B)False

Question 8

Yurus Manufacturing Company produces two products,X and Y.The following information is presented for both products:
   
Total fixed costs are $234,000.
Required:
a.Calculate the contribution margin for each product.
b.Calculate break-even point in units of both X and Y if the sales mix is 3 units of X for every unit of Y.
c.Calculate break-even volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.

Accepted Answer

a.X: $36 - $28 = $8
Y: $24 - $12 = $12
b

Question 9

Samuel Linkletter is an importer of clay gardening pots.He has a six-month agreement with a local gardening store,West City Gardening,to set up a display to sell his product.Samuel can return any unsold items at no cost.The average selling price for the pots is $18 and on average,they cost Samuel $7 each.The owner of West City Gardening has proposed two options:
1.A fixed payment of $375 per month
2.A fixed payment of $125 per month;and,20% of sales revenues earned during the term of the agreement
Required:
a.Calculate the degree of operating leverage for both options at sales of 540 units
b.Explain the results from part a.in terms of risk
c.What number of units must be sold to generate the same operating income for both options? Which option is favourable below this point,and which option is favourable above this point?

Accepted Answer

a.Degree of operating leverage = CM/oper

Question 10

Gross margin in a merchandising organization is considered to be

Accepted Answer

A) the same as the contribution margin. 
B) all revenues less costs which do not change with respect to an output-related driver. 
C) all revenues less cost of goods sold. 
D) all revenues plus costs which change with respect to an output-related driver. 
E) all revenues. 
A) the same as the contribution margin. 
B) all revenues less costs which do not change with respect to an output-related driver. 
C) all revenues less cost of goods sold. 
D) all revenues plus costs which change with respect to an output-related driver. 
E) all revenues.

Question 11

A probability distribution describes the likelihood of each of the mutually exclusive and collectively exhaustive set of events.

Accepted Answer

A) True 
 B)False

Question 12

In CVP analysis,total costs can be separated into a fixed component that does not vary with output and a component that is variable with output level.

Accepted Answer

A) True 
 B)False

Question 13

Use the information below to answer the following question(s).
The following information is for Winnie Company:
  
-What is the break-even point assuming the sales mix consists of two units of Product A and one unit of Product B?

Accepted Answer

A) 2,000 units of B and 4,000 units of A 
B) 2,025 units of B and 4,050 units of A 
C) 4,025 units of B and 8,050 units of A 
D) 4,000 units of B and 4,000 units of A 
E) 4,000 units of B and 8,000 units of A 
A) 2,000 units of B and 4,000 units of A 
B) 2,025 units of B and 4,050 units of A 
C) 4,025 units of B and 8,050 units of A 
D) 4,000 units of B and 4,000 units of A 
E) 4,000 units of B and 8,000 units of A

Question 14

The relative combination of quantities of products or services that constitute total revenues are called the sales target.

Accepted Answer

A) True 
 B)False

Question 15

What would be the expected monetary value for the following data using the probability method?

Accepted Answer

A) $535,000 
B) $250,000 
C) $121,750 
D) $200,000 
E) $30,000 
A) $535,000 
B) $250,000 
C) $121,750 
D) $200,000 
E) $30,000

Question 16

Blankinship,Inc. ,sells a single product.The company's most recent income statement is given below.

Accepted Answer

The answer of Blankinship,Inc. ,sells a single product.The company's most...

There is no unique break-even point when there are multiple cost drivers.

What would target operating income be when fixed costs equal $6,000,unit contribution margin equals $40.00,and the number of units equals 400?

A revenue driver is defined as

Cost-volume-profit analysis is useful for

Operating income is equal to net income plus income taxes.

Gross margin in a merchandising organization is considered to be

A probability distribution describes the likelihood of each of the mutually exclusive and collectively exhaustive set of events.

In CVP analysis,total costs can be separated into a fixed component that does not vary with output and a component that is variable with output level.

Use the information below to answer the following question(s). The following information is for Winnie Company: -What is the break-even point assuming the sales mix consists of two units of Product A and one unit of Product B?

The relative combination of quantities of products or services that constitute total revenues are called the sales target.

What would be the expected monetary value for the following data using the probability method?

Blankinship,Inc. ,sells a single product.The company's most recent income statement is given below.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 3: Cost-Volume-Profit Analysis

There is no unique break-even point when there are multiple cost drivers.

What would target operating income be when fixed costs equal $6,000,unit contribution margin equals $40.00,and the number of units equals 400?

A revenue driver is defined as

Cost-volume-profit analysis is useful for

Operating income is equal to net income plus income taxes.

Gross margin in a merchandising organization is considered to be

A probability distribution describes the likelihood of each of the mutually exclusive and collectively exhaustive set of events.

In CVP analysis,total costs can be separated into a fixed component that does not vary with output and a component that is variable with output level.

Use the information below to answer the following question(s). The following information is for Winnie Company: -What is the break-even point assuming the sales mix consists of two units of Product A and one unit of Product B?

The relative combination of quantities of products or services that constitute total revenues are called the sales target.

What would be the expected monetary value for the following data using the probability method?

Blankinship,Inc. ,sells a single product.The company's most recent income statement is given below.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters